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tv   Book Discussion on Why Government Fails So Often  CSPAN  May 24, 2014 9:49am-11:03am EDT

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[inaudible conversations] >> booktv is on facebook. like us to interact with booktv guests and viewers. watch videos and get up-to-date information on events. facebook.com/booktv. >> peter schuck argues government is often effected because of structural flaws the played both political parties. he says by looking at government policies that have been effected we can figure out how to improve the system as hole. this is about an hour and 15 minutes. >> thank you, wally. coals
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to newcastle most people think government failure is a deeply philosophical level rather than as an analytical level based on empirical evidence. if i have a contribution to make to the people at kate know, it may be to enrich that particular kind of evidence for conclusions that you probably have no need
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for fortification about. i am also delighted to be on a panel whiff wally olson with the my work for for 30 years. and something i contributed to in 1980s and also to be on a panel with one whose work i respected for so long. i begin with the notion of a crisis. anyone trying to sell the book is trying to sell the idea there's a crisis. there is particularly a crisis that again, kato followers par aware of and in deep have emphasized in your own lives. a decline in public confidence in the federal government, i will only mention a few points, even among democrats, there has
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been a rapid and precipitous decline in confidence. 41% had favorable views of federal government in 2013, 41% of democrats, down 10% in one year. this was before obamacare. according to the brookings institution's, up 60% of democrats believed the federal government was mostly or completely broken democrats. i mention these statistics were gathered before the obamacare fiasco, and in an op-ed in the times suggested the consequences of that rollout are far greater
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than is anticipated by most political observers. and throughout the next several elections. what is the biggest threat to america's future according to the public? 64% say it is big government. only 26% said big business. and this polling was conducted only a few years after the recession. that seems to me a very telling point of the parter. in 2011, 79% of those polled were frustrated or angry with the federal government. 74% said the same thing in 2007 before the recession. what are the reasons for this decline in public confidence in the government? i propose several explanations but the one i am going to
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concentrate on and the one that constitute the bulk of my analysis is sort of a straightforward one. the government performs very very poorly. when i say the government tie referring to the federal government, not other governments and i'm referring to domestic policy, not national security, military or foreign affairs policy. so that is my subject, why government fails. there are a variety of theories as to why the government performs so poorly. in emphasis i am not surprise those of you who live in washington, the explanation of partisan bickering and congressional paralysis, democrats blame republicans,
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republicans blame democrats for any failures they're prepared to concede. i emphatically disagree with this. i examine history of political discourse, it has been contentious, and civil, angry and furiously, the interstate highway system was accomplished only fitfully and after protracted disagreement by policymakers. polarization, i argue, is not because of our problems but the consequence of our problems. there is a remarkable correlation that confirms this point of view. first is growth in government
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spending and policy ambitions has parallels almost perfectly if you charge them, the growth in public disaffection and contempt for government. per-capita spending by the federal government is greater than in france, germany and the u.k.. this growth occurs in good times and in bad. it is and linked instead of drifting from the keynesian cyclical use of government and it doesn't depend on whether republicans or democrats control what goes on in washington. the debt to gdp ratio of the federal government exceeds that in most e.u. countries and also exceeds the plan american
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average. this growth of the federal government is obscured by a number of factors except to those who study these matters very carefully. one is the immense growth in private contracts thing by the government, the immense participation in the implementation of government programs by nonprofits and state and local governments and the myth that the united states has the small public sector, welfare state lagger or perhaps true in some comparative terms is as a myth utterly false elate james q. wilson and john dulio
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distinguish between the two systems. when someone proposed adding a new agenda a major debate rose whether it was legitimate for the government take action at all in the metal but the government can take bold action under the system the nation you had to be facing a crisis. it was larger than it had been before but when the crisis ended the exercise of extraordinary powers ended. the new system is characterized by a large policy agenda, an end of the debate over the legitimacy of government action expect in first amendment freedoms. the decentralization of power in congress and multiplication under the old system, the checks and balances made it difficult for the government to start a new program and so the government remained relatively small. under the new system these checks and balances make it hard to change what the government has already done. the government remains large.
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my central theme, the core idea of my book is federal domestic policy failures are caused by deep, returned structural systemic endemic conditions. doesn't matter which party is in power or what the state of the economy is. i think that as a result of this, and as a result of my analysis, the reason for this, liberals, conservatives and i dare say libertarians have an enormous stake in understanding these reasons. how do i analyze the reasons? first, let me sail little bit about my methodology. i rely on social science assessments by economists, political scientists, think tanks, gao, cbo, inspector general's of federal departments.
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my criterion for success or failure is cost-effectiveness. an entire chapter explains what i mean by cost-effectiveness, what methodology is cost-benefit analysis to measure effectiveness. .. >> i don't think anyone would be very happy with these political suggestions with that use of that term. this includes a ballot measure
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about success or failure. so what are these structural reasons for but i have been presaging in this introduction and the introductory remarks and whatever government policy will be with a certain government policies and so let me emphasize the outset that this is highly desirable and what not can be changed. but even if they should be changed, they can't be changed or easily. and indeed i think that it is virtually impossible to change these features of our political culture. and they are deeply embedded in the way in which we view and
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what are these elements? the first is constitutionalism and that is the most familiar to you and they want to emphasize in the second is decentralization which makes it very difficult for federal aid to be implemented or know how it will impact its intended beneficiaries. breaking whatever it wants to do effectively because of the strong protections given to individual freedoms.
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and a fourth constraint is interest group pro, which is more robust in the united states than anywhere else, it's one of the worries of the system but also a feature of the system that renders government impotent and ordering and another is the acceptance of social and economic inequality by the vast majority of the population. and this may strike you as somewhat odd, but when someone compares it with all other will democracies, we end it is an important qualification. in this includes how we worry less about it and we are deeply
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embedded in this. so the policies that are designed to promote quality of outcome meets a kind of resistance they would not even other countries, particularly where those efforts by government create enormous inefficiencies along the way. another feature of it is moralism and it is a strongly religious basis of our social values. and the nature of our political moralizing, partly because it's part of the religious convictions of the american people and partly because of other reasons.
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in another is social diversity and what that implies is that a uniform federal law cannot be nimble enough and flexible enough end variegated enough to reflect the underlying needs and desires of the population. again, we are unique in our social diversity within a modern liberal democracy and not simply for reasons of immigration but also because we are a religious diversity and an economic system. an important constraint on the effectiveness of policymaking is expertise and official discretion. and public opinion, very powerful in the united states than i dare say in liberal
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democracy. one of many examples such as capital punishment is sustained in most american states even today where is the elites tend to disfavor capital punishment. and then finally civil society, with its diversity of which i spoke earlier in our civil society is so robust and so varied and very energetic but a government that seeks to domesticate or regulate or even in some cases to work with a, it is going to run into problems of ineffectiveness and that is the first important feature that is
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endemic in federal policymaking. the second one has to do with incentives. in this chapter i discussed public choice theory in its shortcomings and i've developed a number of different propositions based upon my reading of this literature. and i will dissuade them. the headlines in this. ordinary citizens have two actively participate in political activity. it is foreign policy information and institutions advance of interest. the political effectiveness of a group depends on the ability to manage incentives to overcome structural obstacles. officials have powerful incentives to provide voters short-term benefits and to hide
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the long-term cost that must pay for those benefits. the political dynamics of public policy depend upon how it distributes its benefit and cost among voters in groups. much political activity consists of narrow interest are growing at the expense of taxpayers, something that has been written about. moral hazard is a major source of incentive-based programmatic failure and propositions of that kind. the examples that i provide include many different kinds of programs and fannie and freddie and a host of others. the next systemic effect, if you will, although these are not all defects, as i have said before,
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our society is rich and successful by reason of many factors. but the next one is what i call collective irrationality. here i am a size the voters ignorance about public issues and a literature that many of you have encountered in one way or the other, the basic research was conducted and has now become a much discussed situation even in the halls of congress. miniview have relied heavily on this literature in the third literature is one of the undeveloped by my colleague here, which he calls cultural
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cognition. what he means by that is that on a large number of public issues when he tests for people's views on these issues, he finds the bases are almost entirely insensitive new information. the people come to these issues with preconceived cultural stereotypes and ideologies, and they are very difficult to navigate and you can pretty much navigate and predict what those ideologies are on climate change or abortion or any number of other issues where evidence might alter the opinion of a rational individual.
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another systemic problem is for information and this is, i hope, no surprise to you, i hope that you all marinate in the work of the gentleman who emphasized the nature of the problem better than anybody else could before or since in some of the policy manifestations of that of the bureau of alcohol tobacco and firearms, the information about drug use and their information is very limited. not because these officials are stupid or own form of because congress has made it difficult to collect and maintain this data and employ it. the volcker rule which i discussed at some length, it is
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another example of how informed those who write the laws and regulations are about the intricacies of the way in which other aspects in areas of our society operate. so two weeks after it was issued , it is not widely covered by the press but the banking authority, regulatory authority or applied sure felt obliged to cut back on the volcker rule insofar as local banks. why? because it affected local eggs in the way that the rule makers have not anticipated in the effects were dire indeed, just one example. and another feature of our policymaking system is its legitimacy. or adaptability and flexibility.
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here i provide a number of examples again and not because they are stupid or different to these changes but they actually have tried hard to convince congress to allow them to compete and that includes what would be the rational response to that. and the supreme court was wrong in its decision last year, i believe, to strike down a section for formula and it was actually right in its denunciation of the anachronistic nature of that formula and this includes the
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securing of other actors and it's quite interesting and there's no good solution to this problem. the problem is you are going to in use this with state and local governments and private actors to actually act in what you want them to act in order for a policy to succeed, you have to assure them that wasn't the game are not going to change. and they can invest safely in the nature of the details of the program. but government cannot do that. why cannot do that? for a perfectly good reason.
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and so it can keep its promises and there are very few, if any, techniques that will enable the government upon itself and do this with respect to policies in ways that would secure the resources it needs to succeed. a perfect example of this is obamacare and vastly expanded medicaid. in order to induce states to perform the desired fashion, and offered to pay this for three years and then it would pay i think 85% many states simply didn't believe it and many thought was like receiving a gift of a baby elephant. but then the often grows and
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grows and then you have to feed and house it. and so lots of states are not adapting these otherwise plausible and perhaps even desirable changes. and then there is the problem of mismanagement, which is structural and i had a largely the discussion of fraud and waste and abuse that i don't need to reiterate there. except to say that much of this is a result of structural factors embedded in the way in which government makes its decisions, including the complexities of programs and recruiting the very poor design of reimbursement techniques. but i won't drone on that. a major theme of my book is that
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markets is a fundamental impediment to effective public policy. and consider this feature of market to attain it this includes the speed of markets compared with the incredible slowness and inflexibility you are either in or you're out and you are either in that category or not that category. this includes market regulators
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and demands cannot adopt this policy. and a lot of times it raises the price of a particular service or activity and of course the market respond by finding ways to meet that demand at lower cost. or at a higher quality. and that may undermine if not utterly defeat the governments policy. there are the effects of markets and they do not respect jurisdictional lines. not only is this part of
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international competition with banking and international finance, but the condition of lack markets as a result of markets to evade the kinds ofof markets to evade the kinds of things the government draws. political influence in this includes campaign contributions and the influence wielded by large companies and they would otherwise be coherent or
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effective and i have a discussion of political influence the markets on government cannot think it is much more complicated than it's usually understood and secondly it represents the actual real world individual effects of government policy on part of its consumers and its investors and so those are real factors that ought to be represented in their reasons for that which i discussed in again some of them are deeply rooted and unlikely
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to be changed. rational expectations, a concept that economists have developed to explain why the market anticipates policy changes and to incorporate and respond to those policy changes before it takes effect and thereby neutralizing the intended effect of those policies in many cases. two other effects of markets as there are no good substitutes for market order and the alternatives are law and government policy and they certainly have their role to play. in the final effect of markets is moral hazards.
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and we have some of the consequences without moral hazard. and it will advance their interests with the policy that makes that activity or that service less costly than it would otherwise be. in the next structural problem that i devoted a chapter to is the obstacles to implementation
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and they are not readily dispensed with or circumvented and government attempts to in the divided us into the following categories in this includes example through infrastructure and i have an example through amtrak which i came down to today and the economic disaster that it has been, suppressing the market, simplifying markets, subsidizing market and i have a long discussion under this rubric of student financial aid programs and a disaster about to happen in the ethanol program and many examples.
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redirecting markets is in the effort under the community reinvestment act to force banks to invest in areas that they would not rather invest in on the theory that they have a failure to invest in those areas must be due to racism. reintroducing markets and modifying markets and recruiting markets. and that means those efforts largely in the environmental area to use market mechanisms and that has been very limited. there have been some successes with that. and we have been largely unsuccessful in public policy might be more palatable. in the law, the women of law, to say it, but that is when everyone would use this law as
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an instrument of public policy and the trade-off between its simplicity and its complexity and this includes the legal regulations in this includes the cooperations by markets. in this includes a bureaucracy by congress often for good reason and these predictable effects on policy coherence. and the legalism that the bureaucracy tends to cultivate and leadership problems and here
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i just want to read -- am i doing on time? >> little bit past. >> okay. well, this is amusing. i write dear reader, i bet that you do not know that there are many federal officials who have done the assistant secretary associate deputy assistant secretary, deputy associate, deputy administrator, chief of staff and that this thickening and layering has occurred in almost every department. also discussing compensation status, performance, morale problems and these are endemic, they are not contingent on who is running to the bureaucracy. the difficulties imposing discipline, the failure of the senior executive service and the
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difficulty of securing lower level compliance, contracting out by the bureaucracy and the poor management of contracts and the isolation of this from the realities that surround it. and a chapter on the policy successes and i have just written an op-ed which i hope "the new york times" would publish that tries to identify what i view as policy successes. including what exceeds and the vast majority do not and we can stress that in the q&a and finally have a chapter on remedies including all the reasons why everyone should be an incrementalist and that the world is simply too complex, especially our political world
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to be able to predict with any confidence at all what the effects of this will be. these remedies are also crosscutting and that is to say that i decided not to propose fixes for a particular program but to identify remedies that might cut across all government programs. and organize them according to each of the structural conditions that i have just laid out for you. and so i am out of time. i appreciate this and i look forward to your comments and questions. thank you. [applause] >> i will let you take the chair and i should have mentioned and
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i really want to know of this list of. >> thank you for the opportunity to discuss this important new book. and i might describe myself as a low-key libertarian and we may not always describe ourselves in
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the book actually struck me as very transitional and it could be profitably read by or written by someone who is in the process of reevaluating their views and perhaps changing them. and we need these ordinary college students and split them into two groups and give 20 of them a copy of this book. and then come back in five years and see if the treatment group doesn't have more libertarian senate. in another way and in spiritual terms i think of the book as climbing the mountain of
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enlightenment. along a path which eventually leads to a state of higher consciousness that we call libertarianism. and it takes a couple and this includes some of the steps that it could take. this includes the government failure and the words around it. he doesn't say that it is the rule, or endemic and in the next step of the mountain and that is
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the intention and the programs need to be evaluated in terms of cost-effectiveness. in one step and i thought the criteria for doc to be tightened up a bit in the system is not on a financially sound basis just
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because people are receiving these criteria is, a couple of other programs as well where we describe it looks like the government is backing away from a policy that is both conceived to begin with. so one of them is the 1965 immigration reform and it was good to get rid of it and i'm not sure that success is the right way to describe that. and the next is the 1968 airline deregulation where government was engaged in restricting entry and fixing prices for airlines and i think that calling those successes was somewhat
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misleading that it was somehow successful when success was conceived with government interventions. the next step has to do with economics. and i think we have a good grasp of this and that is a good thing. but we don't want to take it to seriously. neoclassical economics is focused very strongly and obsessed with the concept of equilibrium and pays attention relatively little to innovation. kind of economics and i like to do doesn't really believe that markets are in equilibrium. so we don't worry about whether they're going to get to a good or bad equilibrium.
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in the process of innovation we can think of is having three steps. and no organization has the ability or the will to engage in lots of lots of experience. and the third step of evolution, which means throwing out the things that don't work in keeping the things that do, the market has the discipline of profit and loss with self-evaluation and no organizational self-evaluation with the rigor of the profit and loss system.
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a couple weeks ago the economic report of the president came out in the annual report and it has a chapter called a valuation is a tool for improving government and that means that they have taken the principles so much harder. and this includes the government effort to focus on evaluations. and you would think that switching from the intention and
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that should produce violent results you can take them as a result of this and a lot of them said they should make some improvements and this includes evaluating programs are getting all the agencies to comply and i'm looking at the benefits as a result. and i think that we lost and i think that this initiative to go from this to an evaluation methodology while well intended was ineffective.
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and it is ironic, but i believe predictable because again i do not think that organizations self-evaluation effectively. but you need the discipline of profit and law to get evolution as part of this process. okay, so that is the second step of the mountain. finally the third step of the mountain has to do with the heat and sometimes he will go to a household in the spouses cannot agree about where to set the thermostat. so what happens come out one spouse wants to turn up the heat on the other spouse wants to turn down the heat. and he that i'm thinking of is spelled heat and it is a sense, the would like to turn out that he and give highly educated
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elite more economy and authority and running room to pursue policies and i want to turn on the heat until you've heard the discussion of a lot of the impediments to the government and they included a lot of things like decentralization, checks and balances and a cultural distrust of technical expertise and so on. and i want to see those things increase and i still don't want
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to see them in this includes anyone social processes and capabilities to administer and execute effectively in this includes the self-restraint and knowledge not to go to downwards to do that. and this includes a small minority that doesn't have that self-restraint and knowledge and i think we need social norms and legal restraints that prevent them from doing that.
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and i feel the same way about the highly educated technical elite. all the facets of civil society have the self-restraint in the knowledge not to impose vast policy schemes that go beyond what anyone can understand about our complex system and go beyond anyone's capability of administrating. there is a minority that doesn't have that self-restraint, unfortunately. as well as the self-knowledge. and a lot of them end up in places in the media, academia, and high positions in government. and i think the key is to have even more cultural norms and legal restraints to curb their
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behavior. and so i think this book has taken the step of the mountain by delving into and focusing on government failure and it takes another step up the mountain by being effective in the valuation. in a further step would be to be rigorous about the definition of a success in another would be to look at innovation economic. and then finally the next step would be to reconsider and that is part of this. i believe if i had the opera's
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comp or level incompetence in this, then i, too, would be a militant moderate. but i think if you had my sober assessment of this deficiency and overconfidence and lack of self-knowledge and lack of self-restraint, then he would also be a low-key libertarian. [applause] >> would you like to say something in response to. >> yes. i agree with a great deal of what he said. so let me just identify the points on which i want to send and then i will entertain your questions and comments. in terms of the criteria for success, i am much more careful than he suggests in my discussion of these programs,
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social security, for example, first of all i say that we would design many of these programs differently. so the fact that social security employs a mandatory tax retirement scheme, whereas in 1935 had we initiated retirement savings accounts through iras and other sort of voluntary market driven schemes, we might be better off and i'm sort of even though i am a technologically elite person and i think that any sensible person should be pretty agnostic about that. do libertarians tend to want to redesign these programs on the
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basis of existing programs that may have certain effects and therefore these other programs that they haven't yet designed and implemented would not and this basic program as a given rather than proposing some alternate way of financing retirement and their pairs of us are fairly straightforward and immigration reform, i am very clear in my discussion of that in this includes the abandonment of this that is the important thing and we have a creation of
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a much more important float with the achievement of american society than any other country in the world. there are serious problems, as we all know, so i won't reverse that particular debate. i have written a lot about how to fix the immigration system. as far as airline deregulation, it's quite right that it's a return to the market and it's a policy and not a program. and it should count as a success these days and this includes the theory of that their absence would actually improve social welfare. as an example of that. so that says the criteria for success. this includes how we can
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disagree about a particular program and you have my view but others might disagree. so as far as neoclassical economics, i couldn't agree with you more, and i don't think anything in my analysis suggests that i am indifferent to innovation or satisfied with the equilibrium that has been reached in a static world. the world is not static and i certainly endorse the steps for emphasizing innovation and i discussed a number of ways in which that might be done, including the social science equivalent of a randomized controlled study, which is the gold standard for biomedical
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research and assessment and policy areas. and there's a new emerging literature on how that might be done. and i don't think that it is true and i want to look at each of these programs and reach any program that is plausible and has a lot of political support. just as we are instrumental in
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to one example is a controversial one to many people and i'm confident that i'm right about this come in the 1996 welfare reform, which was the result of a variety of experimentation at the time that we both endorse at the state level and also those experiments were designed by this seat. and there's a new book out by russell sage called fighting for that evidence. and so we count the story of how difficult it was to get that into design and implement the experiments and use their finding in policy terms.
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and so i'm all for favoring this where they do the right thing and i don't think that they have the -- i certainly exhibit and they are a to new evidence and they have the techniques and they have mastered the techniques for designing and evaluating evidence that we need to make better decisions. >> we have time for a few more questions from the floor before
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we end. let me talk about the logistics in the next 20 minutes. after the questions we are going to take a break for lunch. lunch is up one flight of stairs we will be going up the spiral staircase and pausing to purchase this book and possibly have him sign and then we will follow with lunch for all of us. there's an elevator for those who have trouble with stairs. when i call you, please wait for a moment and also the audience will be here to an we would like you to identify yourself so we know more about the audience.
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>> i found this discussion very complex and it begs of a complex solution. and you are starting to find a program that will alleviate the consequences of that. it would be more concise?
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this includes programmatic proxies. when in fact the government is a substitute of policies of the program or does it bear the consequences of this risk. and this is an accurate description of one of the government policies. >> i'm from the baltimore school of law. i think the book is terrific. i love that it is addressing systematic problems. and i would like to see a whole book on this.
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and it's one of the world's largest academic publishers and are particularly well-suited to do this although you sort of skewed the possibility of doing this. now, this was a founder director and there are lots of comparisons that compare and work better. and show us how it has done better or how it's done different so we can at least get some good ideas. >> i will take this offer for
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the installation, but i skewed the great deal of comparative research because other country systems are so very different in ways that it has been discussed here and it's very hard to know whether the program that seems to work better, whether it's difficult to know if it works there and the value of the research in this country is much greater than it is elsewhere. and i didn't mention the absence and i'm not sure whether it is worth getting into. this includes the demonstrations. there is one article that is less than 1 dollar out of every hundred dollars of federal spending that is backed by even
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the most basic evidence and in the health care area, less than one of donna's -- one of a thoud actually works. and the brookings institution assessed every possible scholarly study he could find a regulatory programs and a large variety of programs. this includes setting forth the loss of assessment and it reminds me of the obamacare insurance exchange choices. and it's very illuminating.
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i discuss them here. political scientist, we are told, publish four times as many articles on distribution issues as they do on effectiveness. and so there is there's less of it and your opinion than there is here. going back to my original point, our system is so exceptional. and in others it is not and we have to keep that in mind. it's important to keep that in mind. and it is fast and it permeates everything. and so if your conclusion will be that they have some better programs than we do, and therefore we ought to move to
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this interest, i couldn't disagree more, we have not a clue as to whether that will make matters better or worse than the conditions in which we live. >> second row? >> thank you. i just have the question and a comment. the question is if you can define these policies and the command is i would like to invite you to introduce and it might help in what i call high politics.
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how even we don't intervene always at the right times and we can sometimes investigate this domain. thank you. >> i think you'll have to read the book. i put it out there as best as i can. so i can't respond more than that. >> yes, john? >> hello, i'm from the cato institute and i want to follow up with both speakers something that arnold suggested. >> and you speak of? >> he didn't expect that government [inaudible]
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programs would be part of this. and they also set up and founded a think tank to do in the valuation which was the urban institute and do what do you see those outside contractors is capable think tanks, capable as providing good feedback on programs in terms of the valuation two and are there other potential ways of going about that with external evaluators that might overcome the problem that arnold certainly points to? >> well, it is a great question and i do not have a clear cut answer. it depends. if it is not the answer that you are looking for. ..
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national health insurance proposals is going to that research. mathematics provides some very good policy research and lots of other organizations do so. but you have to look at the individual products. there is a problem of bias.
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the bias can be economic, ideological, professional, i don't see a way around that except to try to have competitive assessments going on at the same time. and possible biases to the surface. >> my view -- >> just to point grammatically there is no archimedes point for policy evaluation that doesn't require human beings to make judgments, judgments would be affected by the usual costs. >> it doesn't address the problem. remember i had three components of innovation, experimentation, learning and evolution. the evaluations by external contractors is part of the learning process and i didn't say that there is -- that
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